Navigating JobKeeper a painful maze for charities

Posted on 28 May 2020

By Chris Borthwick, Thinker-in-Residence, Our Community


The Australian government has, quite rightly, provided assistance to Australian businesses to get through the COVID-19 pandemic. It also intends to treat not-for-profits particularly favourably. For example, charities need only show a 15% falloff in income to get JobKeeper support, rather than the 30% (or 50%, if you’re big) required of commercial enterprises. But charities are not just businesses that don’t pay dividends. They have other differences. Businesses, for example, pay GST; many NFPs are deductible gift recipients (DGRs) and thus GST-exempt. This means that the Australian Tax Office procedures for proving that you qualify for JobKeeper – procedures which are firmly rooted in the needs of small business – don’t work at all for charities. Which the ATO has not recognised at all.

Chris Borthwick
Our Community's thinker-in-residence, Chris Borthwick

If you fire up the ATO helpsheet Support for Not-for-profit Organisations it will tell you that NFPs (excluding charities) will be eligible for the JobKeeper Payment if, at the time of applying:

  • they have an aggregated turnover of less than $1 billion (for income tax purposes) and they estimate their GST turnover has fallen or will likely fall by 30 per cent or more; or
  • they have an aggregated turnover of $1 billion or more (for income tax purposes) and they estimate their GST turnover has fallen or will fall by 50 per cent or more.

NFPs, excluding charities, thus at least know what is required of them. What about charities?

Charities registered with the Australian Charities and Not-for-profits Commission (ACNC) will be eligible for the subsidy if they estimate their turnover has [fallen] or will likely fall by 15 per cent or more relative to a comparable period.

Splendid. But let’s dot the i’s and cross the t’s. Is it in fact true that all a charity has to do is make an estimate and hand it in? Hardly; that would not be good stewardship of the nation’s resources. Well, what does it have to do? The helpsheet offers some snippets of useful information, but it’s still fatally compromised by its fixation on GST.

To establish that a not-for profit has faced or is likely to face the relevant fall in turnover, most would be expected to establish that their turnover has [fallen] or will likely fall in the relevant month or quarter relative to their turnover in the corresponding period a year earlier. Turnover is generally calculated as it is for GST purposes, and is reported on Business Activity Statements, with some modifications …

Yes, but what are we looking at if you don’t pay GST? If you’re one of Australia’s 50,000 charities?

What Australia’s charities need is a straightforward step-by-step flowchart setting out the complete procedure, beginning to end, for applying for JobKeeper support.

As one who has recently been attempting to navigate the minefield, the process involves:

  • Making sure the principal officer has a working MyGov ID
  • Getting onto Relationship Authorisation Manager
  • Using RAM to link that MyGov ID to the ABN registration
  • Getting your Business Portal sorted
  • Actually getting on to the JobKeeper process itself ...

All of this, incidentally, makes it seem rather more straightforward than it will probably turn out to be. There are a number of possible ways to fall off the straight path – not having realised, for example, that the ATO is suddenly going to ask for your personal tax file number and the name of your personal accountant, or (if you’re going through the ATO phone lines) not having realised that if you don’t say anything for thirty seconds you’re automatically cut off.

It’s essential, and it’s obvious, that the ATO needs a helpsheet for charities, separate and distinct from its NFP helpsheet. It would help, too, if the ATO were to catch up with the 20th century and replace its rambling screeds of text with a wizard that could actually thread you through the maze of interlocking authorisations required. What the small not-for-profit wants to know, specifically, is “What do I do next?” All too often, the ATO’s answer is “Hire an accountant.”

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